Central bank scorecard: Taking a stand

Over the past year Latin America’s central
bankers have found themselves, like so many times since the
start of financial crisis, caught on the horns of a
dilemma.

They have faced a delicate balancing act: standing ready to
support their economies if adverse global shocks arise, while
attempting to ensure that monetary policy keeps inflation
expectations in check.

Today, as growth slows across the region – amid
weakening external demand, falling commodity prices and a
turning in local credit cycles – there is a sizeable
risk that a sudden worsening in the global backdrop could cause
a much sharper downturn in Latin America.

Concerns about the fragility of the global economy are
increasingly front and center of the region’s
policy agenda. Despite a respite in August, there remains
widespread anxiety about a possible worsening of the eurozone
crisis in the final quarter of the year, as well as...